China to Make Yuan Versatile than Launching a New Cryptocurrency

While there is a widespread rumor
about china is coming up with a cryptocurrency, several analysts think that it
is not likely to be a cryptocurrency.

Zhou Xiaochuan, PBOC In response
to Libra stated, “Make good preparations and make the Chinese Yuan a stronger
currency.”

The largest banks in China are
state-owned. In practice, PBOC might be controlled by the state and heavily
influenced by it. And, if there will be
a cryptocurrency, it is likely to be a centralized affair. The members of the public will not be able to
be a part of either the governance or the mining process.

The Chinese Central Bank will
need to have the majority of its decisions approved by the significant bodies
in the Chinese Communist Party.
Therefore, even if the Chinese Central Bank would operate with some
liberalization, it will likely lockstep with the political goals of the CCP.
The CCP still appoints the bank directors, and the PBOC should listen to the
State Council, eventually the Xi Jinping.

Since the PBOC will design all
wallets, it will have access to all kinds of data relating to the transactions.
It is not yet clear as to whether private partners will be able to get involved
in terms of analyzing the data or in the process of assembling the wallets.

PBOC has filed for several
patents, and these patents indicate that the PBOC might want to have end-to-end
control of the process. Therefore,
chances are unlikely for public records which are similar to the blockchain,
and there might not be too many services providing permission to access the
generated data. Therefore, it is
unlikely for a blockchain component in all-new digital currency.

Considering the public display of
data, it is very likely that the PBOC might use a similar governance structure
which it might apply in coordination with the commercial banks to release the
CNY into circulation. Ultimately the
issuance might not be controlled by decentralized proof-of-stake or the
proof-of-work, but it will be governed by methods, which have existed for fiat
currencies.

Because the PBOC is accountable
to the state in the ultimate process, every kind of data related to
cryptocurrency transactions might likely be stored for state purposes.

It seems like the Chinese
government is looking to make the Chinese Yuan more versatile than launching a
unique and new cryptocurrency.